Natural Capital Constellation for Climate Resilient Farm Systems

Building the business case for natural capital

Strategic Imperatives:

Produce the right thing
Leverage brand Australia
Improve access to finance
Build a digitally capable workforce

Project Meta:

Completed:
Duration:
Ongoing
Technologies:

In Partnership With:

National Australia Bank Limited
Insurance Australia Group Limited
Royal Melbourne Institute of Technology

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Building the business case for natural capital

A 'constellation' is a cluster of projects grouped around a key theme. The Natural Capital Constellation for Climate Resilient Farm Systems is building the case for natural capital through a series of projects that help:

  • Farmers to adapt and improve their natural capital management according to their individual needs and financial and production goals.  
  • Financial institutions to understand, analyse and incorporate natural capital into their decision-making processes to lower their exposure to natural capital risk and improve their own resilience. This requires robust quantitative demonstrations of the link between natural capital indicators and financial performance.
  • Farmers to unlock new revenue streams, for example, by sharing their natural capital data in a way that allows them to access new markets or other financial benefits. This will require effective, trusted governance frameworks as well as new technology.
  • Reducing the cost of monitoring and reporting natural capital outcomes to make it easier for everyone to understand and manage natural capital.


What is natural capital in agrifood?

Natural capital is the foundation of profitable and resilient farm systems. It describes the stocks of renewable and non-renewable resources (e.g. plants, animals, air, water, soils and minerals) that produce flows of benefits to people (e.g. clean air, food, water, fibre, energy, shelter, medicine, flood defence, climate regulation, pollination and recreation).

Agriculture is the sector of the economy with the highest material dependency on natural capital. Adapting to a changing climate while feeding a global population of over 9 billion by 2050 without substantially depleting the global stock of natural capital will require significant investment in smarter, more resilient farming. Australia’s farmers are well positioned to take a leading role in this next agricultural transformation, with support from the research, financial and technology sectors.

Investing in natural capital is likely to increase farm businesses’ profitability and resilience in four ways:

  1. Increasing income by improving yield, quality and/or market value of products and potentially accessing additional revenue streams, such as soil carbon credits or biodiversity offsets.  
  1. Decreasing costs by using inputs more efficiently, reducing waste and natural asset depreciation.
  1. Increasing resilience to climatic and other stressors. For example, better soil health, including water holding capacity, makes crops and pasture more resilient to drought.
  1. Increasing and protecting the long-term value of the land and thus farm assets.


Building the business case

Realising the potential of natural capital to increase profitability and resilience requires efficient, cost-effective and reliable monitoring of natural capital indicators to enable direct links to financial decision-making. At present, a lack of consistent and cost-effective indicators and methods remains a key barrier to farmers, financial institutions and other key stakeholders incorporating natural capital into operational and financial decision-making. The Natural Capital Constellation focuses on addressing these major constraints in order to build the business case for investment in natural capital.


Our theory of change

Meet the team

Madeline Mitchell - Constellation Lead (madeline.mitchell@foodagility.com) - Madeline is a plants cientist with broad interests in the social, economic and environmental sustainability of agriculture. She previously worked at CSIRO Agriculture and Food where she collaborated with industry and community partners as well as diverse researchers to develop novel crops for the benefit of farmers, consumers and the environment. She has a PhD in plant physiology from the University of Cambridge and is an award-winning science communicator. Madeline holds a joint role with Food Agility and the School of Global, Urban and Social Studies at RMIT University.

Francisco Ascui - Food Agility Natural Capital Advisor - Francisco Ascui is an internationally recognised expert in natural capital accounting, finance and risk management, with over 20 years’ experience across business, government and academia. He has a PhD in Management (Edinburgh), an MBA (Cambridge),and an MSc in Environmental Change and Management (Oxford). His work on carbon accounting was identified by the UK Economic and Social Research Council (ESRC) as one of 50 landmark research contributions over the last 50 years and in recent years he has pioneered a new approach to evaluating natural capital credit risk in agricultural lending, now published as an official guide by the Natural Capital Finance Alliance.

Lauren Rickards - Food Agility Natural Capital Advisor (lauren.rickards@rmit.edu.au) - Lauren Rickards is an Associate Professor in the Sustainability and Urban Planning group of the School of Global, Urban and Social Studies at RMIT University. She is co-leader of the Climate Change and Resilience research program in the Centre for Urban Research at RMIT and leader of the Nature, Risk and Resilience study group of the Institute of Australian Geographers.

How to get involved

Please get in touch if you are interesting with working with Food Agility CRC to deliver or support innovative research programs: Madeline.Mitchell@foodagility.com

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